Focus on Compliance and the Fifth “P” of Marketing to Manage Regulatory Risk

Okay, so let’s now move on to a second type of strategy you can use in risk management when it comes to government regulation, and that’s simply, compliance. Once the law or regulation has been adopted, then compliance is a very important strategy. And the compliance has been on the mind of business in recent years given a flood of recent laws and regulations. Here’s an example from the financial services industry. Citigroup has 30,000 people working on regulatory and compliance efforts. And JP Morgan Chase in 2014 expected to add 13,000 employees to work on regulatory and compliance efforts.

Given this huge growth in compliance, if you’re considering a future career, if you’re trying to decide on a future career, you might consider a career in compliance. Now we’re going to talk more about compliance when we get to the ethics module because compliance is a very important feature of dealing with ethical issues. Let’s now move on to the final approach that you can use to try to manage regulatory risk. And that is actually using the law aggressively to attack competitors. I don’t know if you can name the traditional four P’s of marketing if you’ve ever studied marketing. But the law adds a fifth P to the traditional four P’s of product, price, promotion, and placement.

And the fifth P is plaintiff. You can use the law aggressively as a plaintiff suing your competitors in order to increase your market share. Here’s an example of the fifth P of marketing. The battle between Apple and Samsung, which people refer to as the mobile device patent wars. Over 50 lawsuits in 10 countries have been filed between these two companies, claiming billions of dollars. Steve Jobs the former head of Apple vowed to destroy Android, saying, I’m willing to go thermonuclear war on this. This is from his biography. And according to Professor Love of Santa Clara, Samsung should emphasize in these lawsuits that Apple is losing marketplace share to Samsung, and so has decided to compete in the courtroom instead.

That’s the fifth P of marketing. And these lawsuits have been ongoing. Some of them have been settled, but there’s still some mop-up litigation. Here’s an example of the number of patent suits in the industry generally. I don’t know if you can see the company names. But the red lines indicate companies that have brought suit against other companies. And the blue lines indicates situations where the companies have been suing each other. So you can see there’s a blue line connecting Apple and Samsung, as they have filed suit against each other. So all of these boil down to classic market share, classic business success, that is trying to be created through using the fifth P of marketing, which is plaintiff.

So, that concludes our look at how you can manage regulatory risk. And in the next segment we’re going to take a look at using regulatory law for value creation.